Friday 4 December 2009

Expenses and Lib Dems

Whilst in Trinidad I was reading Martin Bells' excellent recent book on the Parliamentary expenses scandal and how he would clear it up. You can read my review of it in the next Charity Times.

There were those who tried to draw parallels with charities and we had a thoroughly silly debate on "show me yours and Ill show you mine". I'm glad to say ACEVO alone of the umbrella organisations was prepared to argue the ground and debate whether this was an appropriate demonstration of accountability. And then when all the figures emerged what did we see? Debra Alcock-Tyler gets out a lot and Keith Hickey doesn't, and Stuart spends more than me. So?

I'm delighted to see an excellent article "disclosing expenses is fine-good governance is vital", in the recent Third Sector from Ray Jones of The Charity Commission. (Click here to read the article) which argues the point ACEVO was making in this debate. As he says, "at the end of the day its good governance that really protects the reputation of charities". Exactly!

There is currently a working group that is looking at this matter. I was asked to fill in a tightly drawn questionnaire which was based on assumptions on expenses that I did not accept so ACEVO's response set out our position. See below.

Dear Lindsay

Thanks for the opportunity to respond to the NCVO/CFDG consultation on third sector expenses. These comments from ACEVO fall outside of the rather tightly defined framework of questions outlined on the online survey, but we hope address some of the broader issues surrounding how charities should deal with the expenses of their leaders.

The issue of expenses for third sector leaders was created by the sector media following the MPs expense scandal. The implication was that third sector leaders are as unaccountable as MPs. This is simply not the case. MPs created their own framework for managing their expenses, third sector leaders, and in particular third sector chief executives, do not.

Third sector leaders do enjoy an exceptionally high level of public trust. This is essential for us to be able to fulfil our roles. However, ACEVO and You Gov research in July 2009 demonstrated that public understanding of the charity sector is very poor, with the vast majority of the public not understanding how big we are, where we get our money from and what we spend it on.

There is, clearly, therefore a need to improve the dialogue which the sector has with the general public as the trust the place in us is broadly based on myth. However, this needs to be a much broader dialogue than one based only on the disclosure of particular items of expenditure such as personal expenses. Out of context these figures will mean nothing and do nothing to improve the accountability of third sector organisations.

A number of leaders of third sector support organisations did release their expenses for the last few years to the press earlier this year. But the figures were met with complete nonchalance. Even the journalists who had asked for them had no comment to make about them. The figures meant nothing in isolation.

Real accountability in the third sector, and real accountability about the value for money which donors or funders are getting from third sector organisations, can only be achieved by asking much more fundamental questions about what an organisation does and how it does it. New Philanthropy Capital poses five questions by which the public should judge the success of a charity.

Giving the public the right information and narrative to answer these questions is a much more comprehensive form of accountability than talking about expenses in isolation. That is why ACEVO has taken on the hosting of the ImpACT Coalition, a movement of over 280 charities and trade bodies committed to improving accountability, clarity and transparency in the sector.

Tight and transparent control of any kind of expenditure within an organisation is critical if it to achieve its objectives with what are always limited resources. Expenses for staff, trustees or volunteers are no exception to this rule. However, there is no suggestion from the media or the sector’s umbrella bodies that there is an inherent problem in the sector with cost controls. No single organisation or groups of organisations have been pulled up for having poor controls on how expenses are authorised. Typically staff have their expenses authorised by their managers, the CEO has their expenses authorised by the chair and trustees have their expenses authorised by the chair and/or their peers.

The consultation questions focus a great deal on how third sector organisations should monitor, and account for expenses. However, we seem to be focusing on solving a problem which is not there. There is no need to be prescriptive about how third sector organisations should control expenses any more than we need to be prescriptive about how they buy their envelopes or choose their electricity suppliers. Charity leaders and trustees are good at making these sorts of decisions. It’s the easiest kind of decision a trustee can make to say that an expense claim looks unjustified. And this debate about expenses is a distraction from the much more fundamental macro issues of good governance and real accountability on which the sector should be focusing.

So we should be focusing on the big picture. There are significant challenges facing the sector in terms of accountability and legitimacy, about explaining to the public about how we spend our money and how we raise it. But we should not be reactive to a micro issue which has been blown out of all proportion and threatens to distract us from getting those important things right. Organisations are more than capable deciding their own expense policy (most will already have one), and can decide whether or not to disclose those expenses to their stakeholders. They have nothing to hide. But the real challenge is to get the big things right, then expenses will take care of themselves.

Yours sincerely

Stephen Bubb

Had a great meeting with Jenny Willott MP on Thursday. She is the Lib Dem spokesperson on the sector and one of the thankfully large number of MPs who have worked in the sector.
Important to remember no one can accurately predict the outcome of he Election. Who knows whether the Lib Dems will hold the balance of power? So ensuring they have a good position on the third sector is important.

We talked about issues facing the sector, particularly the effects of the recession and the impending public spending squeeze. I told her of our initiative with the Chancellor but we both agreed the dangers for the sector of cuts that expect us to bear the pain. We agreed that many local and community groups are particularly vulnerable to local councils protecting their own and passing on cuts to us, or expecting us to deliver the same service but not fully funded. Testing times for Full Cost Recovery.

Jenny has a strong background in the sector in Barnados, Unicef and then as a CEO in victim support in South Wales. We agreed how good it was that the sector was now more professional and growing in scope and influence. Always good to have senior Parliamentarians who have a strong knowledge and experience of our sector.

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